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Veg Oils Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC1327DTri(Delhi)
AppellantVeg Oils Ltd.
RespondentCollector of Central Excise
Excerpt:
.....item in the case. tariff items considered were t.i. nos. 13 & 8. about the two government of india decisions, he submitted that they were not binding on the tribunal and that they were not based on correct appreciation of law.8. it is true that gujarat high court did not specifically consider tariff item no. 12, but when it said that super-hardened oil not fit for human consumption was not classifiable under item 13 and there being no other specific tariff item under which it could be classified would fall under residuary item t. i. 68, it must be held that the high court excluded the applicability of tariff item no. 12 to the product.9. the government of india's decision in hindustan lever ltd. (supra) is a case directly in point. the case had noticed tungabhadra industries ltd......
Judgment:
1. This is a Revision application (hereinafter called the appeal) to the Central Government against the order-in-appeal No. 1896/79 dated 17th Dec. 1979, passed by Shri B.V. Kumar, Collector of Central Excise (Appeals), Bombay, which stands transferred to this Tribunal under Section 35-P(2) of the Central Excises and Salt Act, 1944, for disposal as if it were an appeal presented before it.

2. The appellants filed a classification list on 23-8-1978 in respect of 'Extra Hardened Technical Hard Oil (Palm)' (hereinafter called HTO) wherein they claimed the classification of the goods under T.I. 68 of the CET. The Assistant Collector of Central Excise, Bombay provisionally approved the classification under T.I. 13, which was subsequently confirmed by letter dated 25-10-78. In the meanwhile, sample of the product was drawn and on test it was found that the melting point of the sample was 54 degree 'C', thus not being fit for human consumption and that when mixed with other oil it could be used for human consumption after proper processing. The appellants made further representations but the Excise authorities maintained that the product was classifiable under T.I. 13. The appellants cleared the product under T.I. 13 by paying duty under protest. It further appears that the appellants disagreeing with the classification sought permission of the Range Superintendent to clear the product under provisional assessment under T.I. 12 of the Central Excise Tariff after executing necessary bond. This request was conceded by the Asstt.

Collector of Central Excise, Bombay and the appellants were called to clear the goods under T.I. 12. The appellants then filed appeal before the Collector of Central Excise (Appeals), Bombay claiming the product should be classified under T.I. 12 and not under T.I. 13 or Tariff Item 68. The Collector (Appeals) by his order dated 17-12-1979 held that the product could not be classified under T.I. 12 or Item 13 of the CET. He thus partly allowed the appeal. Aggrieved with the order, the appellants filed the revision application before the Govt. of India, which, as already pointed out, stand transferred to this Tribunal to be disposed of as an appeal presented before it.

3. At the hearing, Sh. D. N. Mehta, Consultant represented the appellants. Smt. Vijay Zutshi, S.D.R. represented the respondent Collector. They were heard.

4. Shri Mehta, learned Consultant for the appellants, submitted that T.I. No. 12 of the CET covers Vegetable Non-essential Oils, all sorts, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. Palm oil is V.N.E.O. falling under T.I. 12 of the C.E.T. and Hardened Technical Oil is obtained by the process of hydrogenation. The hydrogenation merely converts the unsaturated fatty acids into saturated fatty acids. Irrespective of the fatty acid composition, oils are triglycerides and remain so whether they are in liquid form, semi-solid form, or solid form. Remaining in a liquid form is not a sine-qua-non of Vegetable non-essential oil. In spite of the change that takes place in the composition of fatty acids, hydro-genated oils still remain oils only. Hydrogenation does not render it any less an oil. Hydrogenation, by increasing the saturated fatty acids in palm oil, merely gives it a better quality then what would be obtainable directly from palm oil. The utility of palm oil remains the same. The essential characteristics of palm oil would be present in fatty acids produced by either method. The mere process of hydrogenation does not convert palm oil into a new product and it still remains palm oil. There is thus no manufacture. Shri Mehta also submitted that other Collector's (Appeals) also took the same view viz.

Shri V.K. Asthana, Appellate Collector of Central Excise, Bombay vide his order-in-appeal No. 1112/79 dated 20-9-1979, Shri S.K. Srivastva, Appellate Collector of Central Excise, Hyderabad vide his Order-in-appeal 556/79 dated 1542-79 regarding rice bran tallow (which is hydrogenated rice bran oil not fit for human consumption) held that it was classifiable under T.I. No. 12 of the C.E.T. and Shri B.K.Agarwal, Appellate Collector of Central Excise, Bombay vide his Order No. 552/80 dated 20-3-1980 took the similar view, Shri Mehta further submitted that hydrogenation is only processing and cannot be equated with manufacture, therefore, Extra Hardened Technical Hard Oil i.e.

H.T.O. should fall under T.I. No. 12 of the Central Excise Tariff i.e.

Vegetable non-essential oils, all sorts. Shri Mehta in support of his contentions elied on Mis. Tungabhadra Industries Ltd. y. The Commercial Tax Officer, Kurnool, 1961 SCR 14 (a photostat copy supplied by the Appellants), Union of India and Ors. v. Delhi Cloth and General Mills Co. Ltd. and Ors.,(Supreme Court), Madras Aluminium Co. Ltd. and Anr. v. Union of India, 1981 ELT 478 (Madras), Jalal Plastic Industries and Ors. v. Union of India and Ors., 1981 ELT 653 (Gujarat), Indian Organic Chemicals Ltd. v. Union of India and Ors., 1980 ELT 521 (Delhi).

5. On behalf of the respondent Collector, Smt. Vijay Zutshi, S.D.R.submitted that HTO is well recognised in the trade as a commodity distinct from Vegetable Oils. The Hardened oils can be put only to certain specific industrial uses. They have a distinct name, character and uses. They cannot be classified under Tariff Item No. 12 of the C.E.T. and can be classified only under Residuary Item 68. In support of her arguments, she relied on Navasari Oil Products Ltd. v. The Superintendent of Central Excise & Customs, Navasari and Ors., 1980 ELT 435 (Gujarat), Indian Vegetable -Products Ltd. v. Union of India and Ors., 1980 ELT 704 (Bombay), Tata Oil Mills Organic Chemicals Ltd. v.Union of India and Ors., 1980 ELT 521 (Delhi), Godrej Soaps Ltd. and Ors. (Review case G.O.I.), 1981 ELT 72 (G.O.I.) and G.O.I. order No.1168/1980 dated 29-10-1980, in Revision application, passed by Shri D.N. Mehta, Addl. Secretary and Shri D.N. Lal Jt. Secretary, reported in 1981 ECR 139-D(GOI).

6. It might be pointed that under Notification No. 33/63-C.E., dated 1-3-1963, as amended by Notifications dated 7-3-63, 15-2-64, 16-7-65 and 9-10-71, so far as material for the present appeal, Vegetable non-essential oils falling under Item No. 12 of the First Schedule to the Central Excises and Salt Act, 1944, whether produced in the factory of production of the excisable goods specified in Tariff Item Nos. 13, 14 & 15 of the said Schedule are exempt from whole of the duty of Excise leviable thereon, provided other conditions of the Notification are fulfilled. The effect of Classification of H.T.O. under T.I. No. 12 would be that the appellants would be able to claim exemption under the Notification.

It is not necessary to deal individually with all the precedents cited by the parties. In Navasari Oil Products Ltd. (Supra), the Gujarat High Court held that Super-hardened oil and Palm oil not fit for human consumption (which is the case in this appeal also) would be classifiable not under T.I. No. 13 of the C.E.T., but under the Residuary Item No. 68 of the C.E.T. The Govt. of India in Review case of Mis. Godrej Soaps and Ors. (Supra) in a similar matter held that Palmolein is not the same goods as Palm Oil. In Hindustan Lever Ltd. case (Supra), which is a case directly in point, the G.O.I. held that Hardened Oils with a melting point above 45 degree C (in the present case also the melting point is above this temperature) is a commodity distinct from Vegetable oils; such Hardened Oils cannot be classified under T.I. No. U2 of C.E.T. and are classifiable under T.I. No. 68 of the GET. This decision has also taken note of M/s Tungabhadra Inds.

Ltd. and distinguished the same.

7. Shri D.N. Mehta, learned Consultant for the appellants, during his reply, tried to distinguish the Gujarat High Court's judgment and the Government of India's decision. About the High Court's judgment, he submitted that in that case the applicability of T.I. No. 12 was not considered because it was ot a competing item in the case. Tariff Items considered were T.I. Nos. 13 & 8. About the two Government of India decisions, he submitted that they were not binding on the Tribunal and that they were not based on correct appreciation of law.

8. It is true that Gujarat High Court did not specifically consider Tariff Item No. 12, but when it said that Super-hardened oil not fit for human consumption was not classifiable under Item 13 and there being no other specific Tariff Item under which it could be classified would fall under Residuary item T. I. 68, it must be held that the High Court excluded the applicability of Tariff Item No. 12 to the product.

9. The Government of India's decision in Hindustan Lever Ltd. (Supra) is a case directly in point. The case had noticed Tungabhadra Industries Ltd. v. The Commercial Tax Officer, Kurnool (Supra) relied on by Sh. Mehta before us and distinguished the same. In doing so, (para 6 of the order) they referred to and relied on observations of House of Lord in Macbeth & Co. v. Chislett, (1910) (A.C. 220 at page 223) cited with approval by the Supreme Court in Sales Tax Commissioner, Indore v. J. Singh, (AIR 1967 SC 1454 at page 1457). The decision, on the applicability of the Supreme Court's judgment, concluded in these words : "In other words, the process of hydrogenation is considered as a process of manufacture. If the Supreme Court judgement in the Sales Tax case is made directly applicable to the Central Excises and Salt Act also then Tariff Item 13, Central Excise Tariff would be rendered nugatory. It is therefore clear that it has to be independently seen whether the impugned goods fall under Tariff Item 12, Central Excise Tariff.

On the applicability of Tariff Item 12 or T.I. 68, the decision held as under : "In the trade the hardened oils with melting point above 45 degree C would be recognised as a commodity distinct from vegetable oil. The hardened oil can be put only to certain specific industrial usages as could be seen from the affidavit of Dr. Bamascana Rebolic. The impugned goods have a distinct name, character and use. Therefore, the impugned goods cannot be classified under T.I. 12, Central Excise Tariff." Since the goods are not classifiable under T.I. 12 or T.I. 13, Central Excise Tariff and there is no other specific item in the Central Excise Tariff to cover the goods they would be classifiable under the residuary Tariff Item 68, Central Excise Tariff.

For coming to the conclusion, the decision relied on Gujarat High Court's decision in Navasari Oil Products Ltd. v. The Superintendent of Central Excise & Customs, Navarari and Ors. (Supra). While Government of India's decision is certainly not binding on the Tribunal, it has great persuasive force. The Tribunal would be slow to disturb a decision of the Government of India, unless there be a judicial decision against it or it is based on fallacious reasoning and is manifestly wrong. The present decision is a decision by two Secretaries to the Government. It should be given due weight. The decision is based on sound reasoning and finds support from the Gujarat High Court judgment. In fact no Vegetable non-essential oil is manufactured in the instant case. That stage is complete and a further product HTO is manufactured out of it, so item 12 is manifestly inapplicable. We are in complete agreement with the decision of the Government of India.

Applying the two decisions referred to above, the irresistible conclusion is that Extra Hardened Technical Oil (Palm Oil) not fit for human consumption is recognised as a commodity distinct from Vegetable non-essential oils. It has a distinct name, character and use. Icannot be classified under T.I. 12 and can be classified only under T.I. 68 of the CET. In this view of the matter two orders of Collectors classifying the product under T.I. 12 on which the appellants relied in support of their arguments cannot be accepted and do not help the appellants.

10. In the result, the order of the lower appellate authority ordering classification of 'Extra Hardened Technical Oil (HTO)' not fit for human consumptions' under T.I. No. 68 of the Central Excise Tariff and not under T.I. No. 12 of C.E.T., calls for no interference. The appeal fails and is dismissed.


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